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Money (Photo credit: 401(K) 2012)

In 2006, health-care expenditures in the U.S. rose 6%, a rate of growth significantly higher than inflation and one that, if sustained, would lead to a doubling in health-care spending in a mere dozen years. Some of that extra spending was a function of more doctors doing more things to more people—an increasing number of hip replacements, for example, for senior citizens hobbled by degenerative joints; more diabetes and blood pressure treatments too, for all the increasingly obese people in the country whose health is threatened by cardiovascular disease.

But according to a Price Waterhouse Coopers analysis, 75% of that growth was a result not of an increase in the volume of medical interventions but, instead, an increase in their price.

People like me who obsess about our nation’s crippling medical expenses often focus on reducing unnecessary medical tests and procedures. The folks at Dartmouth, who run the Dartmouth Atlas, correctly worry about unjustifiable variations in the use of medical procedures, with some regions of the country two or three times more likely to, say, perform C-sections than other areas. This medically unjustifiable variation in the intensity of care, we are told, points us toward potentially vast savings. If we can figure out how to identify unnecessary C-sections for example—or tonsillectomies or hip replacements—we can dramatically reduce health-care spending.

But overlooked in all this talk about unnecessary procedures is the unnecessarily high cost of most procedures.

Why does hip replacement in the United States cost $4,000, while costing less than half that amount in Australia, hardly a medical backwater? Why does such an operation cost six times as much in the United States as it does in Canada?

The price of medical services is significantly higher in the United States than other parts of the world. Primary care physicians in the United States make $186,000 per year on average versus $131,000 in Germany. Orthopedic surgeon pay ranges from a high of $442,000 in the United States, to $324,000 in the UK, to a relatively parsimonious $187,000 per year in Australia, that according to analysis by the United Health Group Foundation.

I realize that questioning physician income will raise the ire of many physicians. As a primary care physician myself, I have long felt that we non-proceduralists are underpaid, in comparison to our sub-specialty peers. And no doubt, buried in the average primary care income of $186,000 per year in the U.S. are way too many hard working general pediatricians making closer to $80,000 per year. But even highly paid doctors won’t like what I’m saying. I expect my orthopedic surgeon colleagues will recoil at the thought that they, with all their advanced training, aren’t worth what we pay them.

But the fact remains that U.S. health-care expenses are bankrupting our country. And there is no way to control these expenses without limiting physician pay.